Let Y = $100, QX = Quantity of Good X

question 60

Multiple Choice

Let Y = $100, QX = quantity of good X, and QW = quantity of good W, PX = $4 and PW = $5. The budget equation is

• A)100 = 4QX + 5QW.
• B)100 = QX + (4/5)QW.
• C)QX = 100 + (4/5)QW.
• D)QX = QW + (4/5)Y.
• E)QW = QX + (4/5)Y.

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Definitions:

Accounting Profit

The total revenue of a business minus the explicit costs, representing the financial gain in accounting terms.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the additional return over the investor's opportunity cost.

Implicit Costs

The opportunity costs of using resources owned by the firm for its own production instead of earning revenue from these resources elsewhere.

Explicit Costs

These are the direct, out-of-pocket payments made by businesses for operational expenses like wages, rent, and materials.